What is Strategy.pptx, Defines of Strategy

Helping Material

1. What is Strategy? By Michael E. Porter

2. Main Idea : Strategy is about being different. Companies must choose a unique position and perform different activities from rivals or similar activities differently. Example: Southwest Airlines and Ikea – both operate differently from their competitors. Introduction to Strategy

3. Operational Effectiveness : Doing similar activities better than rivals (efficiency). Strategy : Performing different activities or similar activities in unique ways. Key point: Operational effectiveness is necessary but not sufficient for sustainable profitability. Operational Effectiveness vs. Strategy

4. A company can outperform rivals if it delivers greater value to customers or achieves lower cost . Competitive advantage arises from distinct activities , not just operational effectiveness. Competitive Advantage

5. Variety-Based Positioning : Focusing on a specific product/service (e.g., Jiffy Lube). Needs-Based Positioning : Meeting the needs of a specific customer group (e.g., Ikea). Access-Based Positioning : Reaching customers differently due to geographic or other differences (e.g., Carmike Cinemas). Types of Strategic Positioning

6. Key Concept : Strategy requires trade-offs; companies cannot be all things to all people. Example: Neutrogena – focuses on high-quality skin-care products, sacrificing volume and variety. The Role of Trade-offs

7. Fit ensures that activities reinforce each other, making it harder for competitors to imitate. Example: Southwest Airlines – its low-cost strategy is reinforced by no meals, no seat assignments, and quick turnarounds. Strategic Fit

8. Sustainability comes from fit across activities. Example: Ikea’s self-service model aligns with its low-cost strategy and unique customer service model. Sustainability of Strategy

9. Summary : True strategy is about making unique choices, trade-offs, and creating a tailored set of activities. Operational effectiveness without strategy leads to competitive convergence. Conclusion